New insolvency provisions come into force—what can the insolvency profession expect?

New insolvency provisions come into force—what can the insolvency profession expect?

Today is the day that various changes to insolvency law come into force. Insolvency professionals will (hopefully) be aware of these changes and have taken steps to prepare for them, but just to be on the safe side, Frances Coulson at Moon Beever helpfully summarises the main changes.

Aspects of the Deregulation Act 2015 and the Small Business, Enterprise and Employment Act 2015— both of which became law on 26th March 2015—will take effect from 1st October 2015, as will some secondary legislation.

It will be important to keep making representations to the Insolvency Service and Parliament as to how these changes work (or don’t work) particularly in areas of great concern such as fee estimates, and compensation orders.

The Deregulation Act 2015

The Deregulation Act 2015 (which deals with a myriad of things from driving instructors to “sellers of knitting yarn”!) deals with companies and insolvency in three short sections at sections 17, 18 and 19 and schedule 6. Only section 17 is substantive. Section 18 deals with audit and section 19 merely refers to Schedule 6.

The main changes for 1st October are:

  • it introduces partial licenses for insolvency for either personal or corporate practice. This applies to new entrants to the market not existing license holders. The profession lobbied against this change in vain, in particular regarding corporate practice. If an insolvency practitioner (IP) is dealing with a partnership or rather an individual partner with partnership debts, the IP will need both licenses
  • the Insolvency Service itself will no longer directly regulate office holders so those licensed by the Insolvency Service are given a year to make an application to a different recognised professional body (RPB)
  • it “simplifies” when to report to creditors about appointing and releasing administrators through provisions which negate—in certain circumstances—the need to hold physical meetings and gets rid of the need for a notice

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.